Funeral Home Model

A funeral-home model captures the seven-year operating economics and intrinsic value of a multi-location death-care operator (funeral homes plus cemetery and pre-need). It rolls a location count forward, seasons newly acquired homes with a case-volume utilisation ramp, splits funeral cases across a traditional-burial, cremation-with-service, direct-cremation, and memorial mix priced off a blended average case fee and a per-segment fee index, layers cemetery property and pre-need trust income, nets merchandise cost into gross profit, runs the cost stack to EBITDA, and discounts an unlevered free-cash-flow stream to enterprise value, equity value, and value per share.

The disposition mix is the split of funeral cases across traditional casketed burial, cremation with a service, direct cremation, and memorial-other. Each has a different fee index and gross margin. As lower-priced direct cremation takes share from traditional burial, revenue per case can fall even when case volumes grow. The model keeps segment fee indices and gross margins explicit so changes in mix flow through revenue, gross profit, and EBITDA margin.

Revenue starts with volume: total funeral cases equal closing locations times calls per location, where calls per location equal mature calls times a utilisation factor that ramps over time. Funeral service revenue is then the sum across dispositions of funeral cases times each segment share times the average case fee times its fee index, escalated at a step-up rate. Cemetery property and merchandise and per-case pre-need trust and insurance income layer on top to total revenue.

Death care is a defensive, low-beta, recession-resilient business, but the bulk of estate growth is bought rather than built, so acquisition capex is the dominant call on cash and EBITDA overstates free cash flow in expansion years. The model bridges to unlevered free cash flow, NOPAT plus depreciation, less maintenance and acquisition capex, less the change in working capital, and discounts it at a low WACC with a Gordon-growth terminal value. The implied EV/EBITDA falls out as a sanity check rather than as the valuation input.

Yes. For a single home, set the estate to one location and size the calls per location, disposition mix, and headcount to that market; for a cemetery-led operator, lift the interments per location and average interment price and let the funeral case lines run light. The net-debt line already bridges enterprise value to equity value, so a financing layer slots in cleanly.

Utilisation starts at the Y1 input and steps up by a fixed number of percentage points each year, capped at a practical ceiling. Newly acquired homes integrate slowly and no estate realises full mature volume immediately. Closing locations times calls per location times utilisation gives total funeral cases, which is the primary volume driver in the model.

Death care runs high gross margins (around 74% in the defaults), so the cost of operating chapels, preparation rooms, and a vehicle fleet scales with gross profit, not top-line revenue. Using gross profit as the base correctly weights overhead against operating capacity, and means EBITDA margin expands as the utilisation ramp lifts gross profit faster than per-location headcount.

Acquisition capex equals new locations per year multiplied by the acquisition cost per location. It is separated from maintenance capex (a percent of revenue) in the FCF bridge so the cash drag of the roll-up programme is explicit. Both reduce UFCF before discounting, and the low WACC reflects the defensive, recession-resilient demand profile of death-care services.

With the default inputs the model runs from 49 to 73 locations and approximately 14,065 to 22,320 funeral cases over 7 years. Y1 revenue is approximately $119.5M growing to approximately $217.2M by Y7. Blended gross margin runs approximately 74%, EBITDA margin approximately 24.5%, enterprise value approximately $350.7M, and value per share approximately $17.38 at an implied EV/EBITDA of approximately 12.0x.